Three Tips For Self Evaluating Insurance Coverage
An insurance agent can be invaluable in your quest for peace of mind and financial stability. But to get the most out of that relationship, it’s important to self-evaluate. This can be simple in idea but a little more challenging to execute. To start, you’ll want to take inventory over every facet of your life where insurance plays a role. Auto insurance and homeowners are the two most common with life insurance running a close third. There’s also business insurance, renters insurance, and other policies specific to large purchases (i.e. classic cars, boats, etc.). Each require additional consideration.
Tip: Dig A Little Deeper.
For instance, with home insurance, you may have added on to the property, made renovations, or added a state-of-the-art security system. Any one of these moves could affect your premiums — mostly for the better — but they’ll never take effect if you don’t utilize the resource that is your agent and keep him apprised of these moves as they occur.
While home improvements and property additions may be easy to remember, make sure you dig a little deeper so you’re not slighting yourself on interior possessions. For example, most new homeowners fail to update their policies on personal possessions whenever they add a home theater or buy a computer. If they’re carrying too little coverage, then these items may be considered total losses in the event of theft or fire.
Insurance companies make it easy to track purchases and keep inventory on all the possessions you have along with a total cost of replacement. But again, this isn’t something your agent is going to know unless you share the information.
“Renewals are a great opportunity to verify that you are properly insured,” explained a representative from the Cincinnati Insurance Companies. “When you receive your renewal information from your agent or carrier – usually several weeks prior to the policy renewal date – check your coverages to make sure they’re still appropriate to your situation. If something has changed, mention it to your agent.”
Tip: Adjust For Inflation.
Confession of guilt: in 2006, I moved in to my first apartment. At that time, I purchased a renters policy for coverage of up to $5,000. I did the math and was very proud to know that I was protected if a fire happened tomorrow. What I failed to realize until 2013 was, the same $5k it would take to replace all my replaceable possessions would fall about $777.70 short in keeping up with the present.
The Bureau of Labor Statistics (BLS) has an excellent tool in place for recalculating for inflation. You can find it here.
At the first of every year, review your belongings and make sure the coverage on your renters or homeowners policy is enough to replace your things — not at the price you paid, but at what it would cost if you had to go out tomorrow and repurchase the same items. Then, make sure that your agent knows about the change. If it isn’t something you’re willing to do every year, then make sure you add more than enough coverage at the time of purchase, so it becomes a task you only have to take up every few years.
Final Tip: Apply This Logic To Every Type Of Coverage You Possess.
Go down the list.
- Life insurance: does your family need more coverage this year than they did last year in order to handle expenses and have a cushion should the worst happen?
- Auto insurance: does it pay to keep comprehensive coverage on your newly paid-for vehicle?
- Health insurance: should I add (or subtract) maternity, and is my policy cheaper than what is offered on the Affordable Care Act exchanges?
- Renters insurance: have I bought new things that I want covered? What would it cost to replace my things tomorrow (not eight years ago)?
- Homeowners insurance: renovations, add-ons, new property or installations that might detract from risk?
- Other questions: any major purchases that require their own insurance?
Schedule time to talk with your insurance agent in person, if possible. He or she may have additional tips and suggestions for getting you the best coverage at the best price.